KALAMAZOO, MI – Business activity slowed in the Kalamazoo area and in much of West Michigan, according to data collected in late August by economist Brian Long.

“Basically in Kalamazoo we’re back to pretty much flat,” Brian Long said of economic growth. “That is largely because of some anecdotal things that have happened. We have had more people on summer vacation (among the 76 purchasing managers that he regularly polls) than at any time in recent history in the month of August.”

The result, he said, is that major decisions on industrial expansions, big-ticket contracts and additional hiring apparently went on hiatus as decision-makers took vacations, Long said.

“Many have gotten delayed until we get to September,” he said. “We hope that our September numbers will reflect that.”

Long is a Kalamazoo-based economist who conducts a monthly survey of industrial purchasing managers and creates indexes based on their responses. He is director of Supply Chain Management Research at Grand Valley State University in Grand Rapids and produces a monthly report for the National Association of Purchasing Management.

Long’s index of New Orders – a measure of business improvement in which purchasing managers are asked if orders were up, down or the same during -- turned modestly negative at -4, down from last month’s +7, but much slower than June’s +34.

Long’s Production Index, which asks if companies plan to increase or reduce their output, eased to -6, down from +17, he reported. His Employment Index fell to 0, down from +21, “our lowest reading since January of 2010,” he reported. It asks if companies expect to increase, decrease or maintain staffing levels.

His Index of Purchases, which asks if managers plan to increase, decrease or maintain purchasing levels, was -2, down from +7.

“We’ve hit an air pocket here as far as the local economy is concerned,” he said. “I do not consider it to be cause for concern, largely because the statistics we collect at the national and the international level are on the up side this month.”

He wrote in his analysis that the proverbial rising tide at the state and national levels “floats all boats, and our number will probably flip back to positive in a month or two.”

The Institute for Supply Management, the parent organization of the National Association of Purchasing Management, reported that its national index for New Orders rose significantly to +18, up from +7. It’s Production index rose modestly to +20, up from +15. Its Employment index backtracked to +7 from +9. It has continued to under-perform in recent months, he reported.

Those numbers indicated that the national economy is still modestly positive. They resulted in ISM’s overall manufacturing index edging up to 55.7 from 55.4, with the break-even point between up and down for a diffusion index being 50.0, we can say that the national economy is still modestly positive.

He said the automobile industry, which includes several auto suppliers in the Kalamazoo/Portage and in Battle Creek, is at full capacity. He said most of the automotive firms reported that their orders are steady but the auto companies are waiting for sales figures later in the 2014 selling season to decide what they do as far as expansion is concerned.

He said he is concerned that car companies are selling vehicles ahead of economic equilibrium - that is ahead of customer demand.

“Part of the high auto sales in recent months has been the unleashing of pent up demand for replacing aging vehicles, lower interest rates, and looser credit standards,” he reported. “Everyone also remarks that car last longer, and almost no one trades a car just to make a fashion statement like they did in the 1960s. Hence, unless we start driving more or the cars start wearing out sooner, the current sales rate is higher than “equilibrium.” In more contemporary terms, this level of sales constitute a slight bubble. If we run into another hitch in the economy, auto sales will fall until we again come back into balance.”

He said car companies should be selling at a rate of about 15 million per year but they are selling at about 16 million per year. By doing that, “We’re doing a little bit of robbing Peter to pay Paul.”

He said for the first time since the end of World War II, the nation has not seen a steady increase year-over-year in terms of average number of miles Americans drive. The number of miles Americans have driven, on average, since the onset of the Great Recession in November of 2007 is down 2.8 percent and by 7 percent since 2005, Long said.

He said he expects car makers to know how 2014 sales are doing by December. That is when they traditionally adjust their production schedules.